The U.S. government’s review of several high-profile cross-border business acquisitions has increased public scrutiny in recent years. The federal interagency body responsible for the reviews is known as the Committee on Foreign Investment in the United States (CFIUS). The CFIUS review is intended to protect U.S. national security, and OFII closely tracks trends in the CFIUS review process and their impact on the U.S. investment climate to ensure that America remains a destination for global investment.
CFIUS recently released its Annual Report to Congress detailing all CFIUS notices filed and investigations completed in 2012. Below are highlights from the report, as well as an analysis by the law firm Covington & Burling, and other OFII CFIUS resources.
There was a slight increase in the number of notices filed, from 111 in 2011 to 114 in 2012
39 percent of filings proceeded to lengthier second-stage investigations. This percentage is similar to levels seen since 2009 when the number of investigations reached 38 percent, but continues to be far higher than percentages since in earlier years. For example, in 2008, 15 percent of cases proceeded to investigation phase and four percent in 2007.
Importantly, there was a significant increase in the number of notices withdrawn from consideration. In 2012, 22 notices (19 percent) were withdrawn during either the initial review or subsequent investigation phase compared to 6 notices (5 percent) withdrawn in 2011 and 12 notices (13 percent) withdrawn in 2010.
Investors from 21 different countries accounted for the 114 notices filed 2012. Notably, there was a significant increase in filings from Chinese investors, up from 10 in 2011 to 23 in 2012. China overtook the United Kingdom as the home country with the most notices filed in 2012. The other countries accounting for the most notices include: United Kingdom (17), Canada (13), Japan (9), France (8), and the Netherlands (6).
72 percent of all notices were filed to investors in two business sectors: Manufacturing and Finance, Information, and Services. These sectors accounted for 78 percent of notices in 2011 and in 77 percent in 2010.
Covington & Burling Analysis of 2013 Annual Report, January 2014
OFII CFIUS Overview Paper, March 2013
OFII White Paper on CFIUS, October 2011
Business Roundtable, The Financial Services Forum, the Organization for International Investment and the U.S. Chamber of Commerce
CFIUS Annual Report, December 2013
CFIUS Annual Report, December 2012
CFIUS Annual Report, December 2011
CFIUS Annual Report, November 2010
Mark Plotkin & David Fagan, Covington & Burling LLP